This week the Leveson Inquiry kicked module three – examining the relationship between press and politicians – into gear, with an appearance from Jack Straw MP.  It also heard evidence from, among others Lord Wakeham, Alistair Campbell and former “Times” editor, Sir Harold Evans. Outside of the inquiry, former News International chief executive Rebekah Brooks and a number of others were charged with conspiracy to pervert the course of justice.

The Monday morning hearing began with an opening statement from News International. Rhodri Davies QC, representing the company, said an opening statement to module 3 of the inquiry, examining the relationship between politicians and the press, unfairly represented Margaret Thatcher’s relationship with Rupert Murdoch, and called the suggestion they struck a secret deal “a flight from reality”.

Last Thursday Robert Jay QC, inquiry counsel, suggested Murdoch had suffered from “selective amnesia” when recalling a meeting with Thatcher before his purchase of the Times newspapers in 1981. He said the true intentions of the meeting are “capable of bearing on Mr Murdoch’s integrity”.  Mr Davies said:

“It is quite wrong to do, as Mr Jay did last week, to muddy the definition and the boundaries to the point where no difference is seen between a newspaper supporting a politician it agrees with and respects, and a corrupt deal between the two. That amounts to saying that it is sinister. Indeed, at the heart of the problem for Mr Murdoch and the Sun and Mr Dacre and the Daily Mail is to support through their pages politicians whose views they agree with. But that is exactly what they are meant to do and are expected to do as agents of a free press in a democracy, the problem comes not when they support politicians they agree with but if they prostitute their papers to support politicians they don’t agree with in exchange for favours.”

He said Mr Jay’s description of a note of the meeting taken by Bernard Ingham, Thatcher’s press secretary at the time, as “carefully constructed” was unjustified and Mr Ingham “would have to be positively dishonest if a deal was admitted from the record”.  He told Lord Justice Leveson that the suggestion Mr Murdoch had enlisted the support of Mr Thatcher by striking a deal for political support suffered from a “complete lack of evidence in it’s favour”. He added:

“The documentary record demonstrates conclusively that there was no express deal and no implied deal either. To call this thesis speculation is to use too dignified a term.” There is no basis for Mr Jay’s delayed airing the doubt over [Murdoch’s] credibility. That suggestion had no place in Mr Jay’s opening for module three.  The base for what follows in News International’s success in the United Kingdom is not a stolen transaction but a proper acquisition and one that saved the papers from closure, or perhaps, from Mr [Robert] Maxwell.”

Lord O’Donnell said he agreed with comments made by David Cameron on his relationships with editors and proprietors. In a BBC interview earlier this year, the prime minister admitted he had become too close to newspaper proprietors and executives, including those at News International.

Lord O’Donnell, who was also press secretary to John Major, told the inquiry: “I think the Prime Minister himself, the current Prime Minister, has said that he felt his relationships had got too close, and I agree with him.” He said politicians should be prepared to publish all meetings with editors and proprietors, including social events. He added:

“Truth is, all politicians come into politics having developed a social circle already. They have friends… I’ve taken the view that we should define the line at fairly senior proprietors and senior editors. I think they are different because of the ability of newspapers to very strongly support particular political parties, so I think there is something to be said for those things being noted in a transparent way, but they shouldn’t be stopped. If it is just social and that’s all there is to it, then transparency is the answer. If you get down to the stage of saying actually this is something were going to monitor incredibly closely who said what and we want a record of your social interactions, I think that gets into the ridiculous area, and obviously then you would get into the work of the just shunt things into the unregulated part.

Again I think it just goes back to the Ministerial Code, the question of not just reality but perceptions, and I think by publishing them all, we can be clear that – hopefully we’ll influence perceptions and show minsters feel they have nothing to hide in these interactions.”

Lord O’Donnell was also asked about Jeremy Hunt and News Corporation’s bid for BSkyB, having previously said comments allegedly made by the Culture Secretary, relayed by his special advisor Adam Smith to the company, did not amount to pre-judgment of the deal. Lord O’Donnell said the information should have been passed on to all parties involved in the bid. He added:

“I would have expected the minister to be clear about what he thought his special advisor should be doing. Particularly I think the minister and the permanent secretary will make clear what the nature of engagement should be – if we’re going to use the shorthand – in a quasi-judicial procedure, absolutely. Talking about the process is fine but you should make sure that the same information is passed on to all parties in a case. Fairness is absolutely crucial to what happened. And that should be at the heat of the whole process, that everyone should be clear that that’s the way they should operate.”

The former cabinet secretary was asked to comment on evidence given by former News of the World editor Andy Coulson, who told the inquiry he held shares in News Corporation worth £40,000 while working as press secretary at Number 10, and had failed to disclose the interest properly.  Lord O’Donnell added: “A form was signed but it didn’t disclose the shareholding, and it should have done.”

He went to say the close relationship between some senior police officers and the press had worried him, telling the inquiry he met with then-commissioner Sir Paul Stephenson over potential leaks from the cash-for-honours investigation, headed by assistant commissioner John Yates. He added:

“I raised this issue of there seemed to be certain information which related to a police investigation, a police interview and some politicians. This frequently became public and the question was where was this information coming from. I simply asked Sir Paul Stephenson would he kindly look into the issue, because I didn’t believe the leaks were happening at my end.

[Yates] was doing this investigation so in a sense I wasn’t necessarily saying that it was him, I was just saying it was an area that he was in charge of and could Sir Paul Stephenson look into that area… it was quite apparent to me that a number of senior police officers had very strong links with the media, and they were very close, and in my view, I would say too close.”

Bob Quick, former chief constable of Surrey Police, previously told the inquiry Yates had resisted an attempt to examine his phone records, to establish the source of the leaks. Mr Quick, who led two reviews into the investigation, said Yates told him “I am very well connected” when he attempted to audit the records, and was unable to establish where the leak had come from.

Lord O’Donnell said he felt the Milly Dowler phone hacking revelations, and the failure of the Press Complaints Commission to investigate hacking allegations, had dented the public confidence in the press. He recommended that his successors in the civil service consider amending the Ministerial Code once the Leveson Inquiry has published a report of its findings. Lord Justice Leveson replied:

“Ultimately, everything that this inquiry generates will be for the government to consider, I hope on the cross-party basis that set up the inquiry in the first place, because if it ceases to be a cross-party effort it becomes much, much less valuable.”

Asked about future regulation, Lord O’Donnell suggested the Information Commissioner could oversee the press, as he had proved to be independent and objective when dealing with other issues.

During the afternoon hearing, Alastair Campbell returned to the inquiry to deny an “express deal” between Tony Blair and Rupert Murdoch. The former Labour spin doctor said Murdoch turned his newspaper’s support to the party after it became obvious Blair would win the 1997 general election. He admitted the Sun was seen as a “significant player” in the media, but said the paper backed the winning party rather than deciding the outcome of the election. He said:

“There was a sense of a hierarchy which papers were more important than others and I think the Sun, I wouldn’t call it iconic but I think it was a significant player and I think within the media marketplace, Rupert Murdoch then had, probably within the press, a greater share and greater power than perhaps he does now because of all the change that have happened with television, internet social media and so forth.”

He added: “My point is I never was witness to and don’t believe that there was ever a discussion and said ‘now Tony, if you do this and this and this my papers will back you’ – it just never happened.”  He said Mr Blair “didn’t particularly like” having to meet with Mr Murdoch, but said they would have been “foolish” not to engage with his newspapers – claiming this was the reason behind Mr Blair writing an article in the Sun on the Euro, in 1997.

Mr Campbell said Mr Blair assured Tessa Jowell policy deals would not be made with proprietors, when the minister took over as culture secretary following the election. He also played down a series of phone calls between Mr Murdoch and the Prime Minister in the lead-up to the Iraq war.  He told the inquiry:

“I wouldn’t overstate the significance of a couple of phone calls with Rupert Murdoch… Even at times like this he would have spoken to all sorts of people. No, I wouldn’t read too much into it, to be absolutely frank.”

Of the six phone calls recorded by the Cabinet Office between Mr Murdoch and Mr Blair from 2002 to 2005, three took place in March 2003, shortly before the government’s decision to go to war was announced.  Mr Campbell added:

“In terms of the decision that was being taken and the policy that was being pursued, it was hugely unpopular. We knew that… it was a pretty difficulty media landscape… I was if anything, surprised at how few phone calls there had been when the cabinet office produced this record.  It doesn’t strike me as that odd, not least because by then I think it’s fair to say Tony Blair had very few strong supporters in the media left.”

Mr Campbell praised the Hacked Off campaign, along with non-profit organisations the Media Standards Trust and Full Fact for representing genuine concerns about the media, and said a future regulatory framework should allow for the investigation of trends as well as individual complaints.

He told Lord Justice Leveson he believed education secretary Michael Gove recently spoke out against the inquiry as part of a wider political strategy to retain the support of the mainstream press. He claimed party leaders David Cameron and Nick Clegg, along with Ed Miliband, were being “disproportionately whacked” in the media for setting up the inquiry. He added:

“I don’t think that David Cameron particularly wants to have to deal with this, I don’t think he wanted to set up the inquiry. He had to do it in the end. I think it would be very difficult for him not to go along with whatever recommendations or at least a very large part of the recommendations the inquiry produces but I don’t think there is much of an appetite.”

Mr Campbell denied reports he bullied reporters who wrote unflattering stories about the Labour government but admitted he held some journalists in “complete and total contempt”. He added:

“I had a job to do. My job was to brief the press on behalf on the Prime Minister and to advise the Prime Minister and other ministers, and I did that job in an incredibly exposed place… I dealt with thousands of stories, I dealt with thousands of briefings and I would defend the accuracy and the honesty of those against any journalist any day of the week.”

On Tuesday morning Lord Justice Leveson warned politicians not to disclose information on the contact between Jeremy Hunt and News Corporation before evidence has been heard before the inquiry. The judge said ministers discussing evidence in the House of Commons before the Culture Secretary and others have appeared before him could “undermine the fairness of the procedure”.

He also said he would not adjudicate on whether the House had been mislead by Hunt, saying it was up to the Prime Minister “to take any action he wishes in connection with the conduct of one of his ministers.” He said:

“If the evidence were to have been forced into the public domain and be the subject of argument and debate in advance of the witness giving evidence so that minds are potentially made up and conclusions reached, my immediate reaction would be that I would consider it unfair to subject the witnesses to further questions before this inquiry.” I would hope sufficient respect for my process will allow it to proceed without interruption and without effectively rendering the order which I have made entirely academic.”

The inquiry heard from former PCC chairman Lord Wakeham, who said the body “was never a regulator”. Wakeham, who headed the body from 1995 to 2001, said his job was to try and raise press standards. He told the inquiry the industry wanted a chairman “with a bit of clout” and described threatening editors by claiming he would tell the Prime Minister they were “impossible”. He urged Lord Justice Leveson to rule out statutory regulation and said Parliament would strengthen restraints on the press “whenever they find an opportunity”.  The judge replied: “There’s no question of my suggesting statutory control of the press at all… there isn’t a chance of me recommending that.“

The former chairman said Northern and Shell’s decision to quit the PCC is “serious” and advocated Lord Hunt’s proposal for a contract requiring proprietors to sign up to industry regulation.  Lord Wakeham said changes made to the PCC code following the death of Princess Diana were “right at the time and a significant improvement”, telling the inquiry “you have to pick the moment when the press was in the mood” to accept a tougher code. He added:

“The Press Complaints Commission, in my view, was the best way of protecting the public and I didn’t want to see it destroyed in the way that it more or less has been in the last few years.”

He said he was concerned the Human Rights Act had introduced a privacy law only available to the “rich and famous” in court, meaning the PCC had become an “on the cheap” way of resolving complaints which lowered standards.  Lord Wakeham, who chaired a subcommittee on the second Calcutt report, said he told then prime minister John Major introducing a privacy law would be difficult. He added:

“It would not have been very easy to define the public interest, secondly I did not think that it would be at all easy to get the legislation through Parliament, thirdly I did not think it would protect the people who read newspapers. The privacy law this would have created would have been very difficult for public unless they are rich and not quite as bad for newspapers as they pretend.”

During the afternoon hearing Adam Boulton, Sky News political editor, said the “carelessness” between the press and politicians became “excessive” and journalists should avoid becoming too friendly with politicians if they interview them on a regular basis. He later added:

“I think one of the things about the media is seeking access and I think if you’re pushing at an open door its quite difficult to know when you should pull back… I think you can be blamed with hindsight, if a lot of people think it looks wrong.”

He agreed Tony Blair and David Cameron “may have” got too close to Rupert Murdoch. The journalist expressed surprise that Cameron and Ed Miliband had attended the News Corp summer party last year “to pay court”.  He added:

“I see nothing wrong in holding a party or inviting people to it. I was a little surprised that they felt the need to turn up, I’ll put it like that. And people looking from the outside would draw their own conclusions.”

He went on to say he thought an infamous “pyjama party” attended by Mr Murdoch’s wife Wendi Deng, Sarah Brown and Rebekah Brooks was inappropriate. He said:

“I just thought ‘this is completely bonkers that this sort of intimacy is being indulged in by the Prime Minister’s wife and a senior proprietor’s wife’, and I thought at the time ‘it will all end in tears’.”

Asked about the News Corp BSkyB takeover bid, Mr Boulton said he made it clear Sky was independent and regulated by Ofcom, and he had only had three conversations with proprietor Rupert Murdoch in his 23 years at the broadcaster. He also criticised the government under Mr Blair and Gordon Brown for not feeling the “obligation to tell the truth at all times”.

On Wednesday morning, the inquiry heard evidence from Jack Straw MP, who claimed Rupert Murdoch “seems to enjoy playing with political leaders”. The MP, who held several senior positions under the Labour government, said the proprietor is interested in power and using political connections to help open doors on media policy.

Mr Straw admitted he had “no more than a paragraph-worth of conversation” with the News Corporation founder, but formed the view Murdoch was “interested in power for its own sake”. Asked whether support was ever offered to Labour, Straw said Murdoch would back the winning party “in return for what he thought he could get out of it”.  He added: “I don’t mean a deal, because I’ve seen no evidence of a deal.”

Mr Straw said he was aware Tony Blair had three phone conversations with Murdoch leading up to the Iraq war in 2003 but denied they had any influence over cabinet discussions, which he said would be “disgusting were it true”. He added: “When Mr Blair came into power we all took the view that it was best to get the papers on our side, without compromising ourselves.”

He admitted the Blair government was too close to some journalists from being in opposition, and carried the relationship on after the 1997 election. He claimed opposition spokespeople often built up “very, very close, sometimes incestuous” relationships with political correspondents. He later told the inquiry he was “furious” after discovering a leak of the Lawrence report from Number 10, and had launched internal enquires. The individual responsible did not face action but later left Downing Street.

Mr Jay QC asked Mr Straw about his contact with Rebekah Brooks, after his witness statement revealed the pair “made arrangements” to sit together on a train from Oxfordshire to London. Mr Straw told the inquiry:

“We would talk about what was in the papers. We’d gossip about personalities, and that sort of thing. We weren’t nattering the whole journey.”

The journeys stopped in 2009 when Mrs Brooks was made chief executive of News International and changed her travel arrangements. Mr Straw later said Mrs Brooks had “persistently lobbied” him over the News of the World’s ‘Sarah’s Law’ campaign in 2000. Last week the former executive told the inquiry the campaign was launched on behalf of the paper’s readers.

In reference to the recent resignation of Jeremy Hunt’s special advisor, Adam Smith, over contact with News Corporation, Mr Straw claimed he would have been aware if his own had “acted inappropriately”.  He told the inquiry:

“I knew what they were doing and I knew in real time what they were doing. If there had been a moment where they had acted inappropriately then somebody else in this very open environment, I mean ring of informality but very open environment itself, would have told me. The Private Secretary, the Permanent Secretary, a press officer – they just would have found out immediately.

 On privacy, Mr Straw said Parliament should “take this job on now” and introduce legislation instead of relying on judge’s decisions in court under the Human Rights Act, to show people “that they do have the right to have their privacy protected”.

The former Justice Minster said he regretted the penalty for breaching the Data Protection Act was “too low” and told the inquiry how Brooks, Daily Mail editor Paul Dacre and Telegraph Media Group executive Murdoch MacLennan had lobbied him over the introduction of jail terms for breaches.

He said he dropped that part of the Data Protection Bill to pass it quickly as other policy areas, including prisons, were affected, but said the amendment to section 55 of the Act – concerning the obtaining and selling of data – should now have been introduced.

Asked about conditional fee agreements, which he also discussed with Mrs Brooks and Mr Dacre, Mr Straw said he was faced by contrasting evidence from local and national press, and law firms. Lord Justice Leveson pointed out most people were unable to afford libel and privacy actions against the press before CFAs to which Mr Straw said he had seen them being misused, leaving small local papers with large legal bills.

Mr Straw accused journalists of being “quixotic” and lacked the understanding of what it feels like to make decisions, adding, “there is a degree of voyeurism about the British press”.

He advocated press regulation with a statutory backing – saying self-regulation allowed editors to be “judge and jury in their own courts” – but admitted there will be a “concerted effort” by some newspapers to oppose plans.

During the Thursday morning hearing, political commentator Peter Oborne said meetings between journalists and politicians can be “a potential conspiracy against the public”. In a written statement, he said: “Meetings between journalists and politicians should be viewed as a potential conspiracy against the public, even more so meetings between ministers and proprietors.”

Mr Oborne said under New Labour, political reporting became a matter of private deals with the media, “invisible to voters”. He added it was a “great pity” the House of Commons no longer enforces a “system of social apartheid between reporters and politicians”. He said:

“People who tried to report objectively and fairly were frozen out, were bullied, victimised, not given any access to information, and people who were part of the inner circle and developed social connections – very often – with the powerful political people, were favoured. And of course there’s a price for that because it was very hard to be an independent observer, keep your integrity in those circumstances.”

He later added: “Something’s gone wrong with the way politics is reported. If you go to the House of Commons chamber, it is quite often empty. Brilliant speeches are made and unreported but some sort of furtive lunch may end up as a bitchy piece by a colleague.”  Mr Oborne, who writes for the Telegraph, went on to say the press and politicians became an “elite category which you could observe manufacturing a particular kind of acceptable public truth”.

He called the failure of newspapers to report phone hacking “culpable” but said it was because titles did not want to embarrass each other. He added:

“I think anybody who was to suggest that the reason why the rival newspaper groups were unwilling to report phone hacking at the News International titles because they themselves [had done it] I think would need to provide evidence, a) that those rival newspaper groups practiced phone hacking – I haven’t seen any – and b) that that was the motive even if they did. I think you have to be very careful about that motive.”

He said there was a sense News International was “above the law” because of a lack of interest “at Cabinet level” in alleged criminality at the company. Ministers, including former Culture Secretary Tessa Jowell, were informed their phones had been hacked in 2006 but took no action, implying a “government protection”, he said. He added: “There is some reason to believe that the Murdoch connection with government contributed to the general News International sense of impunity.”

The journalist told Lord Justice Leveson politicians had created a “myth” around the importance of press coverage, and only a “pathetic” Prime Minister would sack a colleague over negative reporting. He said most resignations had “serious reasons” behind them. He was surprised the House of Commons did not take action against ministers who leaked announcements to the media, saying a great deal of George Osborne’s budget seemed to have been leaked to the press before it was announced.

Asked about the industry, Mr Oborne said the police had failed to enforce existing laws and “proper systems” within newspapers had collapsed. He added: “It seems to me there was a gross failure by the Met police to investigate clear evidence of criminal behaviour.”

He advocated a system where newspapers have a standards committee – including the editor, managaing editor, legal head and “old hand” journalist – to vet and record any proposals by reporters to break the law in the public interest.

In the afternoon, the inquiry heard from former Times and Sunday Times editor Sir Harold Evans. He said Rupert Murdoch’s takeover of Times Newspapers was a “seminal event” in collusion between the press and politicians.

Sir Harold, editor of the Times from 1981 to 1982, was part of a management buyout group who wanted to take over the Sunday Times at the time. He said the takeover was relevant to the inquiry because it shows “the manifestations of the same culture of too close a connection between one powerful media group and politicians”.

He said no one knew Murdoch had a secret lunch in 1981 with then prime minister Margaret Thatcher and explained it was thought the bid would be referred to the Monopolies and Mergers Commission (MMC). He told Lord Justice Leveson:

“My Lord, if I might say so, the seminal event was 30 years ago. [Current problems] all flowed from the excessive concentration of power in a single media corporation.”

Evans, who edited the Sunday Times for 14 years, said he was “horrified” that the takeover – which he called the most important in British press history – had not been referred to the MMC by trade secretary John Biffen. Sir Harold said journalists at the Times believed the bid would be blocked. He added:

“I was told by someone I knew that Mrs Thatcher had determined [the bid] must go to Mr Murdoch because she valued his support. In this belief I was supportive of Mr Hugh Stephenson at the Times, who had it from a friend in the Cabinet Office that Mrs Thatcher’s real debt of gratitude was the crucial factor in doing this.”

The former editor said his relationship with Mr Murdoch had started well, describing him as an “electric presence”.  But by 1982 Sir Harold referred to him as “evil incarnate”. At the time he said: “He had his heart removed long ago along with moral faculties and human sensibilities”.

Sir Harold described almost coming to blows with Mr Murdoch over economic policy, after he invited the proprietor to his house for dinner.  Sir Harold said Mr Murdoch had gone through the business news of the paper – “gouging through” the pages with a pen – following another dinner where the editor was criticised by Mr Murdoch’s friends. He resigned from the Times in 1982 over editorial differences with Mr Murdoch.

Sir Harold said press regulation could include an independent ombudsman with the power to summon editors and journalists, and issue sanctions. He added the current Press Complaints Commission does “not even have the power to frighten a goose”.

The witnesses giving evidence to the inquiry next week are Tessa Jowell MP, Lord Mandelson, Alan Johnson MP, Lord Smith, Tom Watson MP, Stephen Dorrell MP, Andrew Marr, Jeremy Paxman, Lord Reid, Lord Brooke, Frederic Michel and Adam Smith.

Natalie Peck, is the web reporter for Hacked Off and a PhD researcher examining privacy law and public figures. She is @nataliepeck on Twitter.